This morning, the Strategy 2026 Q1 earnings call officially concluded, and the Q1 report was released. Consequently, the true operation of the "industry heart," holding 818,300 BTC, was once again exposed to the market. Behind the net loss of $12.54 billion was BTC's price dropping to around $62,000, continuous accumulation of 63,400 BTC, and the STRC scale increasing to $8.5 billion.
Of course, the most intriguing part of the financial report and Michael Saylor's public remarks is the explanation regarding "Strategy selling part of its BTC to pay dividends." Possibly influenced by this news, despite the Q1 performance falling short of market expectations, the capital market showed optimism, causing Strategy's stock price to rise slightly by 3%.
Odaily Planet Daily has summarized the key points of the Q1 report and its potential as follows.
Q1 Book Net Loss of $12.5 Billion, Possibility of Selling BTC to Pay Dividends
Key Point 1: Selling BTC is no longer impossible but an option
A closer look at the Q1 report and the earnings call content reveals that Strategy repeatedly mentioned in its business outlook statements and KPI explanations—"If a convertible bond matures or is redeemed without conversion into common stock, the company may need to sell common stock or Bitcoin to generate enough cash to fulfill these obligations."
As of the end of Q1, Strategy's long-term net debt was $81.7 billion, preferred stock redemption value was $10 billion, and cash on hand was only $22.1 billion. At the same time, the company needs to continue paying preferred stock dividends (current STRC annualized interest rate of 11.5%) and has started issuing common stock to finance dividends. If the BTC price continues to be under pressure, leading to a restricted financing window, selling BTC to pay off debt will shift from a theoretical assumption to a realistic possibility, which will inevitably have a cascading impact on the market.
Strategy's founder, Michael Saylor, stated, "This move is just to convey a message to the market that this model (referring to validating Bitcoin assets to support shareholder returns in the corporate financial system) has been achieved."
It is worth mentioning that, unlike the traditional company's "KPI indicators," Strategy has created its own set of KPIs, including: BPS (Bitcoin per Share), BTC Yield (9.4%), BTC Gain (63,410 coins), BTC$ Gain ($49.7 billion USD) (Odaily Star Daily Note: The above data is as of May 3).
However, in the disclaimer, it also points out that these metrics do not consider debt, do not consider the priority liquidation rights of preferred stock, do not represent the investment return, do not represent fair value gains, and "BTC $ Gain may be positive while the company is recording a huge fair value loss." In fact, Strategy's Q1 business performance substantiated this mechanism: KPI shows a $49.7 billion USD BTC$ Gain, but GAAP-calculated an unrealized loss of $14.46 billion USD.
The core function of this KPI system is to maintain the capital market narrative, rather than reflect the true financial situation. To put it plainly, "celebrating a funeral" or "putting a positive spin on things" is Strategy's usual tactic in the capital markets.
As of May 3, 2026, Strategy holds 818,334 BTC, a 22% increase since the beginning of the year. However, the Q1 financial report recorded a net loss of $12.54 billion USD, almost entirely from the unrealized loss on digital assets ($14.46 billion USD); the total cost basis of the 818,334 BTC is $61.81 billion USD, corresponding to an average purchase price of about $75,537 per coin. It is worth mentioning that, thanks to the recent market rebound, the unrealized gain in Q2 is $8.3 billion USD.
Key Point 2: Strategy Spends $7.25 Billion Buying BTC in Q1, But BTC's End-of-Quarter Book Value Shrinks by $7.2 Billion
Purely in terms of buying and selling, Strategy's Q1 balance sheet barely qualifies as "breaking even."
Financial data shows that Strategy purchased 89,599 BTC in Q1, spending $7.25 billion USD, at an average price of around $80,929 per coin. However, due to the BTC price drop, the book value of digital assets decreased from $58.85 billion USD at the beginning of the year to $51.65 billion USD, a net decrease of about $7.2 billion USD.
I have to say, continuously leveraging (debt + equity) to keep buying the dip in BTC during a bear market has turned out quite well.
Key Point Three: The Objective Impact of AI on Strategy, Software Business Revenue Completely Marginalized
In name, Strategy still claims to be an "AI-driven enterprise analytics software company," as evidenced by its revenue structure including software subscription services, licensing revenue, and product support revenue.
However, in a structural comparison, Strategy's Q1 total software revenue was only $1.243 billion, with a gross profit of only $83.35 million; compared to the $64.1 billion BTC holding market value, the quarterly revenue gap of over 500 times clearly tells the market: during the AI boom era, software businesses even remotely related to AI have been completely marginalized.
Key Point Four: STRC Becomes the Most Eye-catching Business, 9-Month Market Cap Reaches $8.5 Billion
As Strategy's "financing weapon," the market performance of STRC in the continuously declining bear market can be considered a "lifesaver."
Currently, STRC (variable-rate Series A perpetual preferred stock) has grown to a scale of $8.5 billion in just 9 months, becoming the world's largest preferred stock by market cap. Since the beginning of the year, Strategy has raised $5.58 billion through STRC, with a growth rate of 189%.
Furthermore, Strategy has stated that STRC has a Sharpe ratio of 2.53, a volatility of only 3%, and a daily trading volume of $375 million. This means that with the help of STRC, a low-volatility, high-yield, high-liquidity fixed-income product, a new form of BTC reserve-backed asset has emerged in the traditional financial market.
Key Point Five: Q1 and Q2 Financing Structure Undergo a Major Transformation, STRC Becomes the Main Force in Financing
In the financial report, of the $73.7 billion financing completed by Strategy in Q1, MSTR common stock ATM contributed $5.3 billion, while STRC contributed $20.7 billion, accounting for approximately 72% to 28%; but as Q2 (April 1 to May 3) began, this structure saw a reversal—STRC contributed $35.1 billion in financing amount, while MSTR was only $8.1 billion.
This means that the financing gap for common stock is getting smaller and smaller, and the Strategy is increasingly relying on issuing fixed-income preferred stock to maintain its capital base, thereby continuing to drive BTC accumulation.
Additionally, perhaps considering STRC's impressive performance and strong fund attraction, the Strategy is also promoting this "financial management-type fixed-income product" in the traditional financial market. Currently, the company has initiated a bi-monthly dividend payment proposal for STRC, aiming to shorten the dividend payment cycle to attract more funds for purchase.
Key Point Six: Strategy Reports First-Ever Historical Accumulated Deficit
In the traditional financial market, retained earnings are an important indicator of a company's financial health, representing the company's net profit minus all dividends since its establishment, accumulated over the years. In other words, it's a company's "wallet."
Since its founding in 1989, by the end of 2025, after more than thirty years of operation, Strategy had accumulated $63.2 billion in retained earnings. However, by the end of the first quarter of this year, this number had turned negative, leaving a $64.7 billion accumulated deficit.
This is a direct result of ASU 2023-08 (Odaily Planet Daily Note: This standard requires public companies to measure BTC at fair value from 2025 onwards, with price changes directly affecting the income statement), but from the commonly used GAAP perspective in the traditional financial market, Strategy's historical accumulated earnings over more than thirty years have been completely wiped out by a quarter's BTC decline.
Of course, what goes down must come up. If BTC's price rises in the future, this number can return to positive. This metric once again highlights the high risk and high volatility of crypto assets compared to traditional financial assets.
Key Point Seven: STRC-Centric DeFi Ecosystem is Under Construction
The Strategy Q1 financial report mentioned that DeFi protocols such as Apyx and Saturn absorbed over $270 million in STRC assets; $150 million in STRC assets were included in the corporate asset reserves of public companies such as Prevalon, Strive, and Anchorage.
In other words, STRC is evolving from a single preferred stock financing tool into a foundational collateral asset in the cryptocurrency market's on-chain ecosystem. If STRC's attractiveness to the capital market and the crypto ecosystem continues to grow (Odaily Planet Daily Note: Whether in the traditional financial market or the crypto market, fixed income is quite attractive in the financial management race), STRC will gradually surpass MSTR (traditional preferred stock).
Of course, with gains come losses. After the increase in the proportion of STRC, the requirements for Strategy's dividend payment capability have become higher, and the scope of market risk transmission will be wider.
Key Point 8: Tax Deduction Limit Exists, But Not Utilized in the Next 10 Years
In addition to the business-related data, the Strategy Q1 financial report also mentioned a dramatic change in deferred tax liabilities.
According to the table data, Strategy's deferred tax liability plummeted from nearly $1.93 billion at the beginning of the year to only $1.38 million at the end of Q1, almost zero.
In other words, previously, due to the windfall profits in its business, Strategy had a nearly $1.93 billion "tax provision" on its books. However, due to the business losses caused by the BTC decline, the company's income statement classified this unpaid tax as "income tax benefit." Additionally, the $14.46 billion unrealized loss in Strategy Q1 theoretically will also offset some tax, meaning that the company's tax liability is reduced due to the business losses, creating a "tax shield."
However, the problem lies in the fact that this tax shield, which can offset tax payments, is only effective when Strategy does indeed have taxable profits in the future. Yet, the company has indicated that it does not expect any taxable profits for over ten years. In other words, Strategy received a $1.9 billion "tax deduction benefit" due to the BTC decline, but since there will be no taxable profits in the future, it is highly probable that they will not be able to enjoy this benefit.
Finally, apart from purchasing Strategy-related stocks, a prediction market event regarding "Whether Strategy will sell Bitcoin before the end of the year" has been launched. Currently, the probability of "Yes" stands at 44%.
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